Shares jump on bullish forecast by World Bank

I am City A.M's deputy editor, having joined the newsroom in late 2010 as an economics reporter.

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Julian Harris

A BULLISH economic forecast from the World Bank helped the FTSE 100 share index climb to an eight-month high yesterday.

The World Bank, an international body that provides loans in a bid to combat poverty, said that the global economy “is at a turning point”, with growth expected to hit 3.2 per cent this year, up from 2.4 per cent last year. Wealthy nations will finally achieve decent growth, it predicts.

The FTSE closed up 0.8 per cent at 6,819.86, its highest finish since May last year. US stocks were also boosted, the Dow Jones reaching 16,481.94 last night, a rise of 0.66 per cent.

“For the first time in five years, there are indications that a self-sustaining recovery has begun among high-income countries – suggesting that they may now join developing countries as a second engine of growth in the global economy,” the report said.

However, it also warned that monetary tightening in the west could prompt a sharp contraction in capital flows to emerging economies: “In a disorderly adjustment scenario, financial inflows to developing countries could decline by as much as 80 per cent for several months”.